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Center for Quality and Productivity Improvement UNIVERSITY OF WISCONSIN

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Report No. 110

Quality and the Bottom Line

Seren Bisgaard

December 1993

The Center for Quality and Productivity Improvement cares about your reactions to our reports. Please direct comments (general or specific) to: Report Editor, Center for Quality and Productivity Improvement. 610 Walnut Street. Madison, WI 53705; (608) 263-2520. All comments will be forwarded to the author(s).

CQPI

UNIVERSITY OF WISCONSIN

Report No. 110

Report Series in Quality and Productivity

Quality and the Bottom Line

Seren Bisgaard

Center for Quality and Productivity Improvement and Department of Industrial Engineering

University of Wisconsin-Madison

ABSTRACI'

Over the long term, Total Quality Management techniques must be validated economically or they will lose the support of management. In this article, a fictitious example is used to demonstrate how quality improvement tools can be, applied to accounting data. These tools allow managers to make informed decisions about where quality improvement efforts will be most effective and show the resulting improvement in the bottom line.

Keywords: Contribution margin; Factorial experiments; Managerial accounting; Pareto Chart; PDCA Cycle; Quality improvement; Total quality management.

This work was sponsored by the Alfred P. Sloan Foundation. Copyright © 1993 by Seren Bisgaard.

CQPI Report No. 110, December 1993

Quality and the Bottom Line

Seren Bisgaard

Over the long term, Total Quality Management techniques must be validated economically or they will lose the support of management. In this article, a fictitious example is used to demonstrate how quality improvement tools can be applied to accounting data. These tools allow managers to make informed decisions about where quality improvement efforts will be most effective and show the resulting improvement in the bottom line.

Deming's well-known chain reaction (see Deming, 1986) describes how improved quality leads to decreases in cost because of less scrap, rework, snags, delays, and better capacity utilization. As a result, productivity will improve, we will capture new markets with better quality and lower price, and eventually, prosper and provide more jobs. Thus quality improvement, Deming argues, is simply sound business policy. Experience shows, however, that it can be difficult to get upper management to provide the long term commitment necessary to make quality improvement a success. But if the "bottom line" improves why is it so difficult to get the needed management support?

One reason, I think, is that we practice Incomplete Quality Management, not Total Quality Management (TQM). Quality and economics are two sides of the same coin; scrap, rework, snags or the absence of those have measurable economic consequences as does inefficient capacity utilization. Nevertheless, few quality professionals have seriously taken on the challenge of integrating economics into TQM, and little is being done to apply the fundamental concepts of Plan, Do, Check (or study), Act (PDCA) (see Deming) in the accounting area. If we did, we would be able to better show the relationship between quality and the bottom line. We might even improve the quality of standard managerial accounting practices.

To sustain the current enthusiasm for quality improvement, I believe that we need to bring the economic side of management into TQM. As Peter Drucker (1954) says, "Profit is not the explanation, cause, or rationale of business behavior and decisions but the test of their validity" [Emphasis added]. Hence I submit that any management theory detached from the economic side of the business is incomplete. Hoping that "doing good" will result in "good." is not good enough. Accordingly, quality improvement efforts should prove their worth economically. To do

so, however, will involve accounting.

Accounting is a field with terms and concepts unfamiliar to most quality professionals. The most commonly known part of accounting is financial accounting. Its objective is to report results to the outside world (owner, stockholders, banks and the Internal Revenue Service). It uses concepts like double entry bookkeeping, debits and credits, is cumbersome, and bound by strict legal rules. For our purpose, however, the lesser known (see Ishikawa, 1976) but more palatable part called managerial accounting is more relevant.

The purpose of managerial accounting is to provide managers with information and analysis to support day-to-day, month-to-month, and year-toyear decision making. Because jhe focus is on internal use, managerial accounting is not bound by legal rules - any useful way of reporting and analyzing data is acceptable. Managerial accounting is, in fact, much like quality improvement. It involves analysis, trouble shooting, general business improvement efforts, and decision making using numbers. The numbers just happens to be economic. It would therefore be natural to combine the tools and principles from quality improvement with those of managerial accounting and apply the PDCA cycle to the economic side of quality. In particular, Ishikawa's Seven Tools (see Ishikawa) and other graphical methods can be used in conjunction with managerial accounting tools both to improve understanding of the business, and to better document the economic benefits of quality improvement.

In this column I would like to present a few simple ideas and concepts that I have worked on in connection with a consulting project trying to link together managerial accounting and quality. As a vehicle I will use a fictitious example adapted from myoId accounting book (see Johnson and Kaplan, 1987) that may help to show the intimate relationship that exists between quality and the "bottom line."

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Seren Bisgaard

Hopefully these ideas, although simple for the purpose of presentation, may establish the rudiment of a framework for analyzing and presenting the effects of quality in managerial accounting terms.

JOE BOTTLER'S MINERAL WATER BUSINESS: AN EXAMPLE

Imagine Joe Bottler. a shrewd Midwestern farmer, who one year experienced a bad harvest and for that reason began to look for alternative ways of feeding his hungry family. Fortunately he had a wen on his land that produced naturally carbonated water. Carbonated water was becoming popular among students and faculty living in the nearby college town so Joe began to consider going into the carbonated beverage business.

From Jane Stockman, a brewing industry supplier, Joe found that he could buy bottles for $0.15 per bottle, and jugs for $0.25 per jug. Moreover his neighbor Sally Fuller was excited about the idea and promised to fill the bottles and jugs with mineral water for another $0.15 per bottle and $0.35 per jug. Joe then talked to his old friend Oscar Deal who owned the grocery store in town and after some

discussion Oscar promised to sell the mineral water and pay Joe $0.60 per bottle and $2.00 per jug.

This was all encouraging. However, after talking with the local health authorities Joe learned that the bottles and jugs would have to be sterilized. To solve that problem he talked to his friend Paul Hammer, the hardware store owner. He promised that Joe could rent a large steam driven cleaner on a yearly contract for $360 per month. Fortunately due to the special geological conditions on his land, Joe also had a hot spring that delivered more than sufficient steam to run the steam cleaner, so the sterilization did not add any further cost to the operation beyond the monthly rent. Thus Joe felt that the budget. despite the cost of the steam cleaner, looked promising so he decided to go into the mineral water production business.

After a few months. sales stabilized at about 200 jugs and 850 bottles per month and Joe decided that he wanted to monitor the economics of his business more closely so that he could make better and more informed decisions. However.vinstead of using the complicated standard accounting practices used by his accountant, Joe decided to set up an alternative report format as shown below in Table 1. This format he found was more informative and useful for managing the business.

Table 1.

Joe's monthly income statement set up according to the contribution margin format.

to

$ $ %
GROSS SALES:
200 jugs @ $2.00 400.00
850 jugs@ $0.60 510.00 910.00 100%
VARIABLE COSTS:
Jugs (200 @ $0.25) 50.00
Wage to Sally (200 @ $0.35) 70.00
Bottles (850 @ $0.15) 128.00
Wage to Sally (850 @ $0.20) 170.00 418.00
CONTRIBUTION MARGIN: 492.00 54%
CAPACrrY COSTS:
Stem Cleaner (1 @ $360.00) 360.00 360.00
PROFIT: 132.00 15%
Contribution Margin Percent 54%
Break-even Point $665.00
Safety Margin 27% CQPI Report No. 110, December 1993

Quality and the Bottom Line

THE MONTHLY MANAGEMENT REPORT

Let us now consider Joe's monthly report format in more detail. On the top of Table I Joe entered the gross sales. Below that he listed the costs that were directly triggered by individual business transactions. In this case that was the cost of jugs and bottles and the wage to Sally Fuller. Joe then calculated the difference between gross sales and the variable costs. This is called that the contribution margin. Joe found the contribution margin an important concept. For example the gross sales is often as a measure of how a business is going. However. Joe knew well from experience that large sales figures do not necessarily guarantee much in terms of profit. If the costs triggered by the business transactions also are large. then large sales produce little profit. In many decision making situations, however, the contribution margin is the relevant number because it tells what amount of a transaction contributes to cover the cost already committed to (the fixed costs). and hopefully even contributes to a possible profit.

Now back to the format for Table 1. Below the contribution margin, Joe then listed the fixed cost which he called capacity costs. Those are the costs independent of volume (below the maximum capacity of thesteam cleaner) that he had committed himself to pay for the capacity to be in business. In Joe's case, whether he would sell any mineral water or not, he would have to pay for the sterilizer to be in business. We may therefore say that Joe's job as a manager essentially boils down to creating enough of a contribution margin every month to make sure that he can pay the capacity costs and hopefully with some left over for profit. Subtracting the capacity costs from the contribution margin Joe then computed the gross profit often referred to as the "bottom line." Of course, Joe knew that he would also have to pay taxes, but for now we will not worry about that.

To make the monthly managerial report in Table 1 even more informative Joe also computed a few indices so that he could monitor the performance of his business over time. One of these is the contribution margin rate as a percentage of gross sales. For the month exemplified in Table 1 this index essentially tells Joe that on average out of every dollar of sales.. $0.54 are left over to cover the capacity costs and contribute to profit.

Anticipating that business may fluctuate Joe also wanted to know how low the gross sales could go before he started losing money. To answer that question he reasoned as follows: To break-even I need a gross sales of So so that the contribution

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margin equals the capacity cost. However. with the current cost structure, for every dollar of sales I get a contribution margin rate of 54%. so I need to solve the following equation for So:

SoX Contribution Margin Rate/lOO = Capacity Cost

or

Break-even Point: S _ 100 x Capacity Cost

o - Contribution Margin Rage

Using this formula Joe then found that the breakeven point was $665. He could therefore take comfort in the fact that with a current sale of $910 he was well above breaking even. To further operationalize this. Joe also computed a safety margin (in percent)

S r.fi u . (Gross Sales - Breakeven) x 100 a ety margin -~--------~~-

Gross Sales

which for the given sales figures in Table 1 showed that a healthy 27% of Joe's sales provided a profit.

Joe, influenced by the philosophy of the quality movement. was a true believer in graphics. He therefore decided that he wanted a graph that would capture the key features of his monthly report in Table 1. In an xy coordinate system (see Figure 1) Joe set off along the x-axis the sales volume in dollars and on the y axis the profit. Specifically for zero sales on the x-axis he marked off a point for the capacity costs at y == -360 indicating that with no sales the capacity cost would give a negative "profit" (loss) of $360. However, with gross sales of $910 Joe made a profit of $133. He therefore marked off a second point at x=9l0 and y=+133 and connected those two points with a straight line. Interestingly, the intersection between this line and the x-axis, in this case at $665. is the break-even point. The distance between the break-even point and the actual gross sales is the safety margin in dollars. The slope of the line is a measure of the overall contribution margin rate. Thus this simple graph in Figure 1 displays many of the key features of Joe's management report in Table 1.

THE CONTRIBUTION MARGIN CONCEPT

The report format presented in Table 1 for Joe's income statement is based on modem managerial accounting principles (see Homgren; Helmkamp • 1987). It is different from the standard functional income statement format widely used by businesses. The functional income statement is based on

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Seren Bisgaard

Profit- Volume Graph

Profit 200 100

O+-----+-----~~~~~-+----~

-100

-200

-300

-400

Contribution margin rate

200

Sales

800 1000

Safety margin

Figure 1. Profit volume curve showing the key information of table 1 in graphical form.

distributing income and costs to different accounts and departments. It is useful for historical recording of what happened in a period. Hence it serves the informational needs of the outside constituency, stockholders, bankers. and creditors. However, it is ill suited to provide the kind of information needed by management while managing an ongoing dynamic operation. In particular the functional income statement is of little use for analyzing functional relations between cost. volume, quality, and profit. and for predicting future performance.

The contribution margin format presented above displays clearly how costs and profits vary with volume. In fact it is based on the implicit assumption that, within reasonably small changes in sales volume from the current, the profit is approximately a linear function of the sales volume:

profit = sales X contribution margin rate - capacity costs

This kind of approximate functional relationship is obscured by the cost allocation to accounts and departments as in the standard functional format. In other words where the functional format is results oriented the contribution margin format is process oriented (see Imai, 1986). Thus, I will submit that the contribution margin format is a better tool for providing the kinds of insight we need for understanding and exposing the relationship between quality, sales volume, cost and the "bottom line".

CQPI Report No. 110, December 1993

Moreover, the contribution margin format and the philosophy that accompanies it, also lend itself better for PDCA-style management as will be illustrated below.

To appreciate some of the important features of the contribution margin concept, let us now take a closer look at the upper portion of Table 1. First we rearrange the numbers into two columns, one for jugs and one for bottles as in Table 2. By breaking down the numbers into the two product categories, we now see that Joe actually made more money on jugs than on bottles even though the gross sales of bottles was more than 25% higher than that of jugs. This is because the contribution margin rate for jugs is 70% whereas the contribution margin rate for bottles is only 42%. Raw sales figures can therefore be deceiving, and the contribution margin is a more relevant number for making decisions about which products to promote.

Now Joe only has two types of products that produce contribution margins, so his business is relatively simple. However. as a general principle I have found it informative to make Pareto Charts of the contribution margin distributed on each of the contribution margin producing categories. Pareto Charts, so common in the quality improvement context. can also be useful in managerial accounting. In particular it will most likely reveal that the Pareto Principle (see Juran, (964) also applies to contribution margins: A vital few product or service categories provide most of the combined contribution margin. It is therefore those products and services, not those with the largest gross sales. that keeps a business "above water." Thus, unless other circumstances play in, it would be wise to direct special attention to the customers of those categories when initiating a quality improvement program.

In Figure 2a, I have made a Pareto Chart of Joe's mineral water business. To further illustrate my point about the deceiving nature oflooking at gross sales I have added a Pareto Chart of the gross sales in Figure 2b. Pareto Charts of the contribution margins for different product categories, as in Figure 2a, combined with run charts over time of the proportions for the key categories can then be made for successive periods to monitor possible changes in customer preferences and market developments. Should changes occur, positive or negative, then those might likely be related to the quality of the products or services provided and should therefore be the object for further study.

..

"

Quality and the Bottom Line

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Table 2.

Breaking down the information in Table 1 according to the two product categories.

BOrrLES % JUGS % TOTAL %
% of Total Sales: 56% 44% 100%
Sales $'s 510 100% 400 100 910 100
Less: Variable Costs 298 58% 120 30% 418 46%
Contribution Margin 212 42% 280 70% 492 54%
Less: Capacity costs. 360 39%
Profit 132 15% •

Pareto Chart
600 Contribution Margin 600
500 A 500
400 400
300 300
200 200
100 100
a Jugs

Bottles

Sales B

Bottles

Jugs

Figure 2. Pareto Chart of (a) the Contribution Margin, (b) the gross sales for the month summarized in Table 1.

Note it is jugs and not bottles that contributes the most to profit.

THE PDCA CYCLE IN ACTION: TWO EXAMPLES

I will now with two examples show how Joe's managerial accounting system may help apply the PDCA cycle to the economic side of the business and how we may use it to study the quality of his production and its relationship to the bottom line. Specifically:

I. From Table I and Figure 1 Joe has a clear idea of what happened in a specific month. From further analysis by plotting key indices over time as run charts he can get an appreciation for the variation in his business so that he, at least informally, can distinguish between random fluctuations and real changes, cycles, trends or other systematic patterns.

2. By making tables and graphs like Table 1 and Figure 1 based on budget data he can make plans for future months.

3. Comparing the graphs and tables of what he planned with those of what actually happened, Joe can check the differences.

4. Studying the differences, Joe can use Ishikawa's Seven Tools and other statistical methods to find the root causes for real differences and develop solutions to his problems .by either bringing the actual economic situation closer to the planned, by modifying the plans and bring those closer to reality, or a combination thereof.

5. Using graphs of key indices and other

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important economic data over time Joe can monitor the effects of removing root causes for problems, and possibly identify new opportunities for improvement.

I will now show how this can be used in an effort to improve quality. Suppose for a particular month Joe's budget was as in Table 1. Thus we will assume that the profit-volume graph shown in. Figure 1 is a summary of his plan. However, as we all know things do not always go as planned. Suppose after the end of the month the data showed that the sales increased to $980. However, somehow to Joe's surprise and dismay, despite this increase in sales, the profit was reduced to only $50. Suppose further that the capacity cost was as planned $360. We can now superimpose the actual profit-volume graph on the planned as in Figure 3. Then from Figure 3 we can readily see, by the lower slope of the graph, that the reason for Joe's problem was that the contribution margin rate slipped to only 42% from the planned 54%.

A slipping contribution margin rate may have several causes requiring different remedies. An appropriate response therefore would be to call a meeting of upper management and the people

Profit· V .... meGcaph

ft .. ,

Figure 3. Comparing planned and actual performance using the profit-volume graph as a part of a comprehensive PDCA-style management system.

CQPI Report No. 110, December 1993

involved in sales, marketing, and production to review the facts, diagnose the problem, and suggest possible corrective actions. In Joe's case, working closely with his suppliers and customers as he does, he might call a meeting with Sally, Oscar and Jane. After reviewing the planned and actual profit-volume graphs with the team, a cause and effect diagram might then be constructed to seek input as to why the contribution margin rate might have slipped. Such an exercise could then indicate that the average contribution margin rate might be lower because of (1) a shift in product mix sold towards products with a lower contribution margin, or (2) increased variable costs due to quality problems. To illustrate how the concepts and methods of quality improvement would apply to managerial accounting and how quality relates to the bottom line, let us now consider two different scenario's corresponding to these two possible root causes for Joe's problem.

..

SCENARIO 1.

Based on the cause-and-effect diagram suggesting that one possible cause for the slipping contribution margin rate was a shift in product mix, Joe might, as a first step, make a Pareto Chart of the past month sales. Now suppose this chart suggests that the product mix as suspected has shifted away from jugs towards bottles. Run charts of the product mix over time might then reveal that this is part of a general trend that already started several months ago. Further analysis using the Seven Tools and a customer survey might then reveal that the market in general is expanding, that the bottles are selling well, but that the quality of the appearance of Joe's jugs has deteriorated so that customers now increasingly prefer another brand of jugs with a French sounding name.

A quality improvement project aimed at reducing the quality problems related to the appearance of the jugs would then be an appropriate response. Control charts of the positioning of the labels might then indicate that the labeling machine badly needs maintenance. After instituting a preventive maintenance program providing regularly scheduled lubrication and tightening of the bolts on the machine, the control charts might then show that the appearance problem has been eliminated. After a few more months Joe might then, from his graphs of the contribution margin rate, the Pareto Charts, and other statistical output, find that he slowly is regaining the confidence of his customers, that the lost market share for jugs is coming back, and that his "bottom line" now is improving.

Quality and the Bottom Line

It may be tempting to try to provide an estimate of the economic consequences of Joe's deteriorating quality on the sales mix and hence the profit. This is often referred to as "cost of quality" calculations (see Kaplan and Atkinson, 1989». However, reliable estimates can clearly never be obtained in cases like the above involving customer reactions to quality problems. Such numbers are what Deming would call "unknown and unknowable." It may of course be possible to make assumptions about what the market share would have been had we not had any quality problems and calculate the "cost of quality" and the consequences in terms of lost profit. Sometimes such estimates may be useful. Thus I will not like to suggest that "cost of quality" estimates should not be made when they are part of a larger whole. However, such calculations are often hard to justify and may not necessarily carry much weight with management. I therefore think an integrated approach as exemplified in the hypothetical scenario above tracking down and exposing the causal relationships all the way backwards from the bottom line, lost market share, to product quality, and to what happened on the production floor is more useful. With this and a continued monitoring of the economic effects after a quality problem has been eliminated, management should have sufficient evidence to appreciate the causal relationships between quality and the bottom line, and actual "cost of quality" estimates should be less important and only constitute a part of a comprehensive package of decision support material provided to management.

SCENARIO 2:

Let us now instead suppose that Joe's problem is due to the contribution margin rate is slipping because of increasing variable cost. Specifically, after it has been determined from Figure 3 that the contribution margin rate is reduced, a Pareto Chart of the sales may reveal that the product mix is roughly the same. The root cause for Joe's problem is therefore more likely with increasing variable costs. Using the Seven Tools to analyze this situation we might find that Sally over the past several months increasingly has had problems with defective bottle and cap assemblies evidenced by a heap of rejected bottles and caps lying in the back of Joe's barn. Since Joe is not able to send these defective bottles and caps back to the supplier this quality problem has increased the cost of "raw" materials and hence reduced the contribution margin. Incidentally, since Sally in this example is paid on a piece rate basis, her wages would not have increased and the accounting system

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would not have shown a related increase in wages. If asked she probably would have told Joe that she was unhappy about the quality problem.

To get a better idea of the magnitude of the problem Joe might then make a plot of the difference between the number of bottles purchased and sold for the past several months, plotting both the actual differences and the percentage differences to adjust for fluctuating volumes. Those plots might then reveal that an increasing proportion of bottles has been scrapped. Multiplying the difference between purchased and sold bottles by the cost of bottles might then provide Joe with a conservative estimate of the "cost of quality" that can be useful for accessing the urgency of the problem. However, as already indicated one should not loose sight of the fact that the real (total) cost of quality is "unknown and unknowable" and most likely much higher that such conservative cost estimates will reflect.

Having identified and located some of the symptoms of poor quality (the increased cost of raw material, the increasing heap of scrap on the shop floor, and the deteriorating morale among the employees), we now need to track down the real root cause, develop a possible solution, implement it, and monitor its effects on the income statement and ultimately the "bottom line." To do so Joe might then call a meeting consisting of process operators and suppliers, in this case Sally and Jane. Now imagine that Sally insist that the bottles causes the problems with the defective assemblies, but that Jane is equally sure that the bottles she supplies are flawless and is convinced it must be the caps that causes the problem.

To resolve this conflict Joe recalls reading about a similar problem of faulty assemblies in Ellis Ott's book (see Ott, 1975). After reading up on this Joe then quickly conducts a two factor two-level factorial experiment with bottles as factor A and caps as factor B as recommended by that book. Specifically he first selects six good and six bad bottle and cap assembles. He then carefully labels each of the bottles and caps from the bad assemblies with minus signs. Next he labels the bottles and caps from the good assembles with a plus sign each. After that he then interchanges the caps from good assembles with caps from bad assemblies and verse visa and test them. The minusminus combination and the plus-plus combinations of a four run 22 factorial are then the original assemblies, and the new assemblies created by interchanging the components from good and bad products constitute the remaining two minus-plus and the plus-minus combinations as shown in Table 3.

Now suppose the number of bad assembles were

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as in Table 3 then Joe quickly concludes that Sally is right and it must be the bottles and not the caps that cause the problem. With this experimental evidence Joe then approaches Jane who in turn works with the manufacturer of bottles to solve the problem. As the quality problem with the bottles is resolved Joe is then soon able to see from his charts that his contribution margin inches back up to about 54% because of the reduced cost of materials, and eventually his bottom line improves.

DISCUSSION AND CONCLUSION

In this column I have provided some simple ideas about how we may integrate the economics of management into our TQM approaches. What I have shown is obviously quite simplistic. This was partly for the purpose of this short presentation but also because our experience with this is limited. I believe that we have a lot to learn. The accounting community has already taken steps towards working on cost of quality. The most prominent of this work is discussed in the context of Activity Based Costing(see Kaplan and Atkinson, 1989; Ott. 19XX) (ABC). However, some of this is more focused on assigning cost to activities than to genuine quality improvement and detective work as exemplified above (see Johnson, 1992). Much of the existing literature also does not link the technical and operational problems together with the financial to the extend that I think would be beneficial. At the Center for Quality and Productivity Improvement at University of Wisconsin-Madison we have recently initiated a project to try to further develop ideas about quality and managerial accounting. We hope to learn from application in industry what is helpful and what is not. Our approach is as with other research a combination of theory and practice applied iteratively.

There is clearly a lot of important information

Table 3.

A 22 factorial experiment for troubleshooting the defective bottle and cap assemblies.

+

1 6 o

A B # BAD

BOTTLES CAPS ASSEMBUES

6

+

+

+

CQPI Report No. 110, December 1993

hidden in the accounting data that can help us improve quality. Likewise there are real opportunities for improving profit though quality. Bringing together the technical information that most quality engineers already feel comfortable using with economic data is a powerful combination. The duPont company (see Juran, 1964; Davis, 1950) as early as 1919 developed the concept of a chart room where financial, technical and operational information was displayed and analyzed by management for the daily operation of that company. With the proliferation of spreadsheet programs and powerful computers we should be able to build on this tradition and further broaden the impact of our quality efforts. I hope to be able to report on progress in this area in the near future.

ACKNOWLEDGMENT

This work was sponsored by the Alfred P. Sloan Foundation. I want to thank Bruce Ankelman and Howard Fuller for their help with the tables and graphs and to George Box and Spencer Graves for useful comments on a previous draft.

REFERENCES

Cooper, R. and R.S. Kaplan, (1991). The Design of Cost Management Systems. Prentice-Hall; Englewood Cliffs, NJ.

Davis, T .C. (1950)." How the duPont Organization Appraises its Performance," American Management Association, Financial Management Series Number 94. Reprinted in Johnson H. T. (1980), Systems and Profit. Arno Press; New York.

Deming, W.E. (1986). Out of the Crisis. MIT Center for Advanced Engineering Study; Boston, Mass.

Drucker, P.F. (1954). The Practice of Management.

New York: Harper & Row.

Helmkamp. J.G. (1987). Managerial Accounting. 2nd ed. John Wiley and Sons; New York.

Horngren, C.T. Cost Accounting: A Managerial Approach.

Imai, M. (1986). Katzen. .. Random House; New York.

Quality and the Bottom Line

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Ishikawa, K. (1976). Guide to Quality Control. Asian.

Productivity Organization

Johnson, H.T. (1992). Relevance Regained. The Free Press; New York.

Johnson, H.T. and R.S. Kaplan (1987). Relevance Lost: The Rise and Fall of Management Accounting. Harvard Business School Press; Boston.

Juran, J.M. (1964). Managerial Breakthrough.

McGraw-Hill; New York.

Kaplan, R.S. and A.A. Atkinson (1989). Advanced Management Accounting. 2nd ed. Prentice-Hall, Inc.; Englewood Cliffs, NJ

Ott, E. (1975), Process Quality Improvement:

Troubleshooting and Interpretation of Data. McGraw-Hill; New York.

Palle Hansen P. (1972). Lensomheds Metoden I Grundtrtek. 2. Institutet for Lederskab og Lensomhed; Udgave, Copenhagen.

CQPI Report No. 110, December 1993